We as humans have fundamentally changed after the Coronavirus pandemic. Every industry and business is going through a similar process of change. The outsourcing industry is no different. So what are the changes and how Covid-19 has altered the way outsourcing work? In this article, we will explore the answers to these questions and what does the future hold for the outsourcing industry altogether. Let’s get started.
If you’re thinking the industry is headed for a downfall due to low business exchange, don’t worry. Several studies and reports suggest that the industry will see a boost. For instance, this report published by the Global Industry Analyst predicts that the outsourcing market will attain the $220 billion mark in 2020. Also as per a 2019 Statista report, the global outsourcing industry generated $92.5 billion in revenue.
Due to worldwide lockdown, the old practices are no longer relevant. Covid-19 pandemic has put the outsourcing companies in the spotlight. They’re now expected to be the trailblazer. Slow and poor quality hardware, bad network connectivity, and untimely backup will no longer be tolerated in the new and sophisticated world of outsourcing services.
The industry must work towards meeting the new technological challenges and provide the tools and infrastructure for employees to collaborate effectively and work online.
Certain norms will change after the pandemic is over, outsourcing businesses will have to adapt to the new digital transformation and trend of remote working.
Formation of different value networks
A major value-adding factor of business is its connections. In outsourcing, creating connections to get more business for an enterprise and its services are known as value networks. They are significant as they promote collaboration between partners and accentuate supply chain visibility. This trend has displayed how industry-leading firms can work with other businesses to provide strategies and competitive differentiation.
There are different types of value networks creation. This year the leading value networks will be:
Purchasing network: when two or more companies collaborate to create more business, better solutions, and maximize outsourced services to increase profits.
Service provider network: when different outsourcing service companies collaborate to solve complex problems and challenges they encounter.
Single enterprise: when outsourcing firms hire developers from other services providers to enhance their product and outcomes.
Single vendor and multi-vendor approach
The most common trend by businesses looking to outsource their software development is to either go for a single vendor with high brand value in their niche and then get multiple projects developed from the same vendor. Or they pick different companies for particular expertise and negotiate separately with them.
The multi-vendor approach will be more popular this year. There are so many services in the IT department such as web development, AI, ML, cloud services, mobile development, and other designing services. All these can be arranged from different vendors and hiring businesses get the best of all. Getting multi vendors for specific requirements also ensures that businesses don’t suffer major losses in case of another unexpected crisis like the Covid-19 pandemic.
Rising trend of co-sourcing
What is co-sourcing?
Co-sourcing is when a business uses a combination of its internal resources and outside services to reach the same goals. As we know that outsourcing is used for any expertise lacking in internal services along with saving time, cost, and expenses in hiring new staff for additional support. For instance, an organization can develop its software project partly in-house and outsource the rest of the development to another firm or company.
Co-sourcing relationships help businesses renounce focus on their core business expertise and establish their competitive advantage while collaborating with relevant partners to add more value to their business and the outsourcing partner.
As the partnership develops, the service provider is more driven to create valuation and profit for the client’s business.
In the long run, both the client and outsourcing partner can create more user-centered technological products. They can co-create, innovate and develop together. Eventually, co-sourcing business partnerships will bring more financial value and market capital with less risk for both parties.
Let’s explore this with an example. The IT industry is booming with new-age digital products built by two companies that are from two different parts of the world. The two companies which came together can divide the development of their most ambitious software projects based on team size, company infrastructure, and core expertise among each other while also holding the management at the client end. Thus, the whole partnership is concentrated to create products and solutions which will bring more comfort for the end-users and more profit for the collaborating enterprises.
The arrival of the Digital outsourcing model
Currently, the outsourcing services model includes products and services provided by people and maintained or powered by tools. This traditional outsourcing model works on services offered by people and supported by frameworks and tools. But this has already started to crumble and a more automated model is taking over.
Starting from this year, we will see a new outsourcing model in operation where services are offered through digitally automated tools, and people will control these tools. This model is far more sustainable and digitally inclined where services are provided by tools and people focus on the efficient working of these tools.
Robotic automation, AI, machine learning, and other advanced technologies are already disrupting the software development process. There is not much time when they will take over the process entirely and the outsourcing industry has to adapt to the new digital strategies and processes.
Concluding thoughts
As we move further into 2021, it is obvious that businesses will expand their technological base via outsourcing to companies with better infrastructure and expertise in new technologies. If your company is also looking for a reliable and competent offshore software development company, do get in touch with us. We can offer the best software development services for your enterprise.
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